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The TPCA show in Taiwan has a record number of exhibitors due to the combination of several related fields of endeavor in electronic circuit manufacturing and packaging including: Surface finishing, IC packaging, thermal management, and green technologies.
Pictured above at the opening of the TPCA show are the leaders of the world's electronic interconnect industry trade associations as well as invited honored guests including the Vice President of Taiwan. (Photo courtesy of the TPCA and Taiwan Kong King)
On the first day of the event the TPCA released its white paper outlining plans to propel annual output values to above the $37.8 billion benchmark across the domestic printed circuit board (PCB) industry by 2020. Exhibitors and attendees future equipment orders from the huge new Foxconn display and printed circuit assembly plants being built in Hubei as the company seeks to gain more business from Apple.
Big news - who benefits the most? Who will protect the innocent (chip users)? Is leaving America "foundry-less"* good for the United States?
IBM will "sell" its chip operations to GlobalFoundries according to a joint statement by the companies. IBM will pay "the buyer", owned by the government of Abu Dhabi, a reported $1.5 billion over the next three years to take the chip manufacturing business "off its hands".
*The world's dozen or so leading chip foundries that account for more than 90% of global production (including IBM) will all be foreign owned when this deal is completed.
Back to the future
Lockheed is reported to have three captive PWB shops in the U.S. Northrup Grumman has an in-house board operation. Whelan is establishing a new highly automated in-house PWB operation. Intel is said to be planning a new captive board facility in Arizona and said to be offering a bounty for "successful" job referrals. Is it to develop new technology that independent shops cannot afford? Is it for secrecy? Is it to shorten supply lines? Is it to gain time to market or some other competitive advantage? Is it the start of a trend?
WKK Distribution Ltd. was awarded a 2014 Global Technology Award in the category of Best Distributor – Asia during SMTA International.
Is it still just the price?
After visiting the Design-2-Part Show (D-2-P) we revisited the concept of using value propositions to offset cheaper prices. We were astounded at the number of people that effectively stated that they would the cheapest system rather than the lowest cost equipment. Yes, there IS a difference, and sometimes the added cost of using the cheapest system is substantial. We also found that those that bought the newer system with greater productivity, ease of use, updated software, and smaller footprint often ordered more of the units of the newer system after a short (several months) of running production along side of the "older" competitive models who tried to protect their business by simply lowering the price and promising future improvements.
Some things just never seem to change. When one visits some of the leading board makers making advanced substrates and assemblies in Asia today, one usually sees the latest production equipment. Then I thought of the New Jersey manufacturer that I met at D-2-P show, and wondered what I will see when I visit a new "highly automated" board maker in the U.S. next month.
CEATEC JAPAN 2014, the Combined Exhibition of Advanced Technologies (CEATEC) which was held at Makuhari Messe in Chiba Prefecture, Japan October 7th - 11th appears to be following the shrinking footprint the similar to the Consumer Electronics Show (CES) held in Las Vegas each year.
See Dominique Numakura's (DKN Research) write up of the show on our comments page.
Move over Amazon
Dragon Circuits in Texas announced that it successfully completed 14 test runs of delivery by drone of packages weighing up to several pounds. It did not state thee range of the drones used in the test runs. Dragon has a drone division that builds a wide variety of these systems.
We need more industry participation and on campuses collaborations like the new Raytheon-UMass Lowell Research Institute (RURI).
Plans for the center were announced in August. It officially opened on the campus Friday, October 10, 2014 in the school's Mark and Elisia Saab Emerging Technologies and Innovation Center, the school's new $80 million research center.
Kyle Homan, a doctoral student in electrical engineering, gave a presentation on printable electronics and nanotechnology at the opening.
Raytheon has already embedded employees on site and plans to commit $3 to $5 million over 10 years to support the collaborative operation. It's a great way to move critical technology forward while simultaneously training candidates for the company*.
*Raytheon currently employs about 1,000 UMass Lowell alumni.
Have you seen the TPCA's (Taiwan Printed Circuit Association) first class promotional video on its interconnect industry?
Take nine minutes and watch the video on the following link.
Did anyone notice?
An insurance company in Beijing, China bought the renowned Waldorf Astoria in New York City for a price of nearly $2 billion. Many American companies are worried about protecting their intellectual property as they ventured forth into the vast unknown of the China market. Others formed JVs or wholly-owned subsidiaries (with Chinese managers and labor). Some simply licensed technologies or sold their business units (e.g., IBM's personal computer operations to Lenovo*) to Chinese organizations. China, including its foreign-owned facilities, is now the world's leading producer of printed circuits. Yet, some are reluctant to enter their market choosing to protect their IP and gain a "large" share of smaller or shrinking markets rather than forge ahead and get a substantial piece of a larger pie while they can. China is now the world's largest cell phone market. The same is true for a variety of vehicles. China is also now America's largest creditor. It is acquiring major American assets other than those in our industry. I wonder. Will there come a day when China will not allow technologies that it does not own in part or wholly, directly or indirectly, or are not made in China, to be sold in China?
*The Lenovo Group is increasing its challenge to HP's personal computer and printer operations. This could be one of the reasons for HP's decision to spin that unit off.
Do you wonder why the U.S. now produces less than 5% of the world's printed circuits?
A small New Jersey PWB fabricator exhibiting at the Design-2-Part Show in Marlborough, MA told me that he would not attend any of the forthcoming IPC events as it was "too expensive". He told me that he had not gone to an IPC meeting in several years. He stated that he could process HDI boards and high layer count MLBs with no problems. He stated that his minimum hole size was 150um (drilled mechanically) with a Pluritech that was "several" years old. I told him about some of the newer processes, equipment and developments in direct imaging, build-up processes, low stress electroless copper, and inspection. I asked how he would keep his operation up-to-date if he did not attend a major show populated by his suppliers and customers. His response was, "It's too expensive to attend." Then, "How much does the new equipment cost?" not, "What are the benefits?" not, "How many parts per hour can be processed?" not, "What is the resolution capability?" not, "What is the cost per part produced or potential savings per square foot?" not, "How can it improve my yields?" and not, "What would I learn or see that would be necessary to not just survive, but to grow and thrive? How would this better prepare me to meet my customers future demands?" All this in the face of news from the IPC Study on North American PCB Industry Forecasts Through 2017 that HDI/microvia boards experienced the highest growth rate there in 2013. I thought of an ostrich and almost asked him if he had heard of buggy whips*.
*See Bernie Kessler's (Bernard Kessler & Associates) comments on this one. We all speak of "value added". Does doing nothing compare to "value removed"?
Be sure to look at our "Comments & Discussion" page for Joe O'Neil's (Hunter Technology) and Dan Feinberg's remarks on the changing face of tomorrow's EMS and other industries!
As we close the month we note with concern Beijing's clamp-down on the student protests in Hong Kong demanding elections without pre-approval of candidates by China. The students are demanding the resignation of Hong Kong's chief executive. Tear gas and pepper spray has been used on the protestors. Beijing is stating that the demonstrators will NOT be allowed to occupy government buildings in Hong Kong. A number of main streets have been "closed". Travelers to Hong Kong are being warned of delays in getting to their destinations from the airport.
Aside from the "free election" issue we wonder not only how this will end, but how it will affect future investment in China, and China's rising position in electronics development as well as manufacture. Will there be counter measures? Will existing operations and partnerships formed for lower costs or for the opportunity to engage and participate in China's burgeoning consumer market be damaged? Will the "home countries" of investors apply penalties to those companies operating in China impose "penalties" on products shipped home or create added taxes on income not repatriated? What alternative actions can be anticipated? What other repercussions, if any, are likely?
I wonder what the content of the conversations at the joint HKPCA/IPC event in Shenzhen the first week of December will be.
The joint SMTA International Conference and Exhibition co-located with the IPC's Fall Standards Development Committee Meetings in Rosemont, Illinois at the end of the month. Preliminary reports stated that attendance was up slightly from the prior year, the technical papers were excellent and that the exhibition was really a "local show" without any major introductions or improvements highly visible. The effect of the economic situation, the rapid shift in the manufacture of hand-held and automotive devices to a few powerhouse corporations, and the plethora of "too many events" seemed to take its toll on the exhibition portion of the event. We'll attend the IPC's Tech Week later in October to see what differences there may be. There is still a need to find a way to bring different events and trade organizations together to advance the goals of all members, whether individual or corporate.
We suspect that there will be some Apple supply chain shifts to meet its new product demands, fix the reported issues of the recent roll-outs (e.g., bending of iPhones in back pockets), need for protective sapphire glass on the new "large screen" devices, and new antenna designs (and construction methods). Samsung will apply continued Android market pressure in China with its devices that have new touch and proximity features. Chinese producers are gaining ground as well... and then there are the "new" Windows products. Margins for all are bound to shrink as competition heats up.
Intel's commitment of $1.5 billion for a 20% minority stake of a holding company in the Tsingua Unigroup which will own China's Spreadtrum Communications and RDA Microelectronics is an interesting move to establish a strong future position in the China (and global) mobile marketplace. Both of these companies are leading fabless IC companies in China that develop mobile chipsets for smart phones and other wireless consumer electronics products. Spreadtrum expects to jointly develop and sell a line of Intel Architecture-based SoCs with initial products available by the second half of 2015.
No surprises here
The world market for PCBs declined an estimated 2.2 percent in real terms in 2013 to an estimated $59.4 billion according to IPC’s World PCB Production Report for the Year 2013. In the U.S. PCB bookings dropped 4.5% in August 2014 from August 2013's level. We wonder how much of this was market shrinkage in parts, how much was due to price squeezes, how much was replaced by new or different packages, and how much was just a drop in demand for equipment using the formerly produced PWBs.
If successful, TTM's announced intention to gobble up Viasystems by early 2015 is sure to generate further board making consolidations and job losses. In our opinion, the about-to-be new #2 board-maker in the world with sales of over $2.5 billion will have to rationalize its new combined total of 16 sites in the U.S. where TTM* is running at only 60% of capacity in order to "benefit" from the acquisition. There are about 30,000 workers in the 28 sites of the two entities in the U.S. and China.
*See Dr. Hayao Nakahara's comment.
The IPC TechSummit will be held in Raleigh, NC October 28-30. It will include:
CALCE Annual Tin Whiskers Symposium
Electronic System Technologies Conference (2nd annual)
EMS Management Council Meeting
It is not too late!
We believe that the passing of the RAMI (Revitalize American Manufacturing and Innovation) ACT by the U.S. House of Representatives is a critical step for America's economic recovery. It is designed to preserve and recapture jobs. However, it is only a first step. We were hoping that it would be passed by the Senate before the next recess or election, and not just "buried" as hundreds of House bills have been during the past few years. But, hope springs eternal while progress and action do not. Congress just started a 7 week recess. Maybe the government and industry will get behind the RAMI ACT and take action when they return without waiting for the newly elected members of the Senate to be sworn in! That's probably just a "pipe dream".
Perhaps we should follow the model of ITRI/ERSO in Taiwan. That seems to have worked well for decades.
On this note, it will be interesting to see what will be presented by 35 European "start-ups" representing the entire supply chain from materials to electronic systems and services in the Innovation Village at SEMICON Europa to be held 7-9 October in Grenoble.
What does survival flexibility require today?
An "adaptive supply chain" if you follow Thompson's recently announced changes of Fairchild Semiconductor's closing of 5-inch and reduction of 6-inch manufacturing lines while focusing more on its 8-inch operations in various parts of the world.
Taiwan's exports rose to $28.1 billion last month, a three-year high. Record sales of electronic components (e.g., chips from TSMC) for the impending release of the iPhone 6 and other portable devices were credited for the large increase.
End of summer - end of an era? Which is the way forward? New or renew???
NEPCON South China in Shenzhen, China August 26-28 was "OK" in terms of attendance- lots of prospects/"tire kickers" but very few buyers. Finland’s JOT Automation signed a 3-year distribution agreement at the show with WKK Distribution. WKK Distribution will act as a lead distributor of JOT Automation products for Asia-Pacific. The partnership will focus on JOT Odd Shape Assembly Cell, JOT Router, JOT Tiny Test Handler, JOT G3 Final Tester, JOT M10 Functional Test Solution, JOT IDeA, JOT Vision Inspection Cell and material handling products.
Japan's high-tech PWB volume in June increased 8.6% over that of June 2013, but revenue declined 4.1% for domestic build-up types of multilayers - a typical sign of declining business, a maturing industry, cheaper foreign sources, and overcapacity. According to DKN Research, prices for these types of circuits used in cellular phones dropped 12% in Japan during the past year.
Japan manufacturers are also engaged in a price war with Taiwanese and Chinese competitors with double-sided and multilayer flexible circuits. Selling prices on these dropped more than 33% in the past year. Overall, forecast for the Japanese circuit industry for 2014 is NOT better than 2013's, which was the worst since 2008.
The world's top 100 printed circuit makers account for approximately 80% of global demand.
Nothing is forever. The interconnect industry (PCB and PCBA) has had a good run and matured. It has progressed technically, shifted geographically, consolidated, thrived and suffered due to geopolitical shifts as well as technical advances. Some well-known domestic companies are undergoing inversions. Others are shrinking or struggling to regain a profitable (albeit smaller) status after squeezing suppliers, inventories and eliminating much of the R&D funding for future improvements. Renewing appears to be more difficult as competition for "more of the same" continues to increase and value differentiation declines. In fact, some of the cost reduction activities have actually removed value from many of the offerings making them less attractive in the long run.
Change is inevitable! We can contribute to it or be the "victims" of it. We can invest in the future or have no future. We believe that today's survivors that are experiencing declining options for their current offerings must seek out new directions, new alliances, new wares, new cooperative development activities and support for the future.
Opportunities do exist! *3D packaging has stalled due to both economic and technology issues. Mitsubishi Heavy Industry has started a new room temperature wafer bonding service for MEMs and biosensors for firms designing 3D packages and are unable to make them themselves. 2.5D appears to not be faring much better. New improvements in packaging appear to be filling some of the current needs and gaps. We can extend product life cycles with product/process improvements while developing new disruptive or not-in-kind technologies.
*NOTE: Remarks on packaging on by Vern Solberg, Solberg Technical Consulting, on "Comments & Discussion" page.
New flexible substrates with 14 micron thin cores and 9 micron Cu surfaces provide the reality of 25 micron line and space volume production and, along with new technologies, the opportunity of PCB and IC substrate makers, and their supply chains to work more closely with the packaging industry.
Future success will require a total reassessment of your company's core values, mission statement and goals. It takes a new strategy and action plan. It will require you to question your managements' styles. Procedures will have to be reviewed, too. Why were these established? Are they still needed? Should they be modified to meet today's LEAN manufacturing needs and technology requirements? Do they support speed to market? Should you change or create new areas of focus? Do all your managers feel the urgency?
What are YOU doing to ensure YOUR future?
New cooperative activity
The newly established liaison between the IPC and the International Electrotechnical Commission's (IEC's) Standardization Management Board (SMB) should be a boon for the rapidly growing printed electronics industry. All concerned parties have something to contribute and something to gain from this collaboration to create international standards. One must, however, keep an open mind for new potentially disruptive technologies that could potentially bridge some applications of the areas encompassed by printed electronics, printed circuits, and other packages.
It's time to get serious
The Taiwan Printed Circuit Association (TPCA) has asked for government support to help Taiwan's PCB industry develop next-generation products to counter slowing growth rates. The nation's industry (including output from its factories in Mainland China) will generate sales of $18.3+ billion this year. The TPCA is likely to receive a good audience from the government as the nation's Vice President has been a keynote speaker at the annual TPCA show's opening ceremony the past few years.
Shortly after announcing a new $30 million share repurchase program this month Plexus held an opening ceremony for its $40 million 265,000 square foot manufacturing facility in Guadalajara, Mexico. The company has stated that it is now actively recruiting to fill employment opportunities. Full employment at this facility is expected to exceed 700 workers.
The increasing costs in China and elsewhere, the stability and availability of a skilled and semi-skilled work force, locally established supply chains, and the proximity of 5 universities are all sure to have contributed to the decision.
SEMI announced another positive book-to-bill IC equipment order ratio for the month of July.
Where will the equipment go? What types of chips with what nodes will it build? What industries will consume the added production? When will the PCB/packaging industries partake in the results?
Who is building the packaging substrates and where are they built?
Taiwan Semiconductor Manufacturing Co. (TSMC), the world’s largest contract chipmaker, yesterday said its revenue hit a record high $2.16 billion last month up 7.6% from June and 24.6% higher than a year earlier. The company also forecast a sequential revenue increase next quarter because of its strength in 28 nanometer and 20 nanometer process technologies as well as strong demand for flat panel IC drivers and tablet power management chips.
United Microelectronics Corp. (UMC), Taiwan’s second-largest contract chipmaker, posted its lowest revenue in three months last month, down 7% to $380 million due to less contribution from its solar business.
Conversations with several major circuit interconnect and packaging supply chain members in Singapore, Hong Kong, China and Japan indicate that business is "spotty" at best. KCE in Thailand is having record sales participating in circuits for the automotive after market. Thailand was said to now be the 2nd biggest source in Asia, after China, for that market segment. However, one of the world's leading market trackers informed us that our information was wrong and that Japan was second with an automotive PCB production 35% greater than Thailand's in 2013.
Unimicron Technology's Q2 2014 net profits were back up 377% from the previous quarter to $9 million. Gold Circuit Electronics and MFLEX are still working to restore profitability. Viasystems lost money the 2nd quarter of the year. The 2nd half of 2014 looks promising for Taiwan-based circuit makers. Global has restored its Lone Star name with a statement that it will only provide domestically produced circuits.
SEMI has forecasted double digit growth for equipment makers for the next two years. What will the applications be? Will Intel's new 14nm node be part of the surge - or will the cost/benefit ratio not be good enough? How much of an effect will "wearable electronics" have?Which substrate/board builders will benefit? When? Where?
Samsung's smartphone market position in China has been supplanted by Xiaomi and in India by "home-grown" Micromax in the 2nd quarter of 2014. The latter is offering a 6-inch screen with magnetic flip cover, 1.3 GHz dual-core Media Tek processor, and an Android 4.2.2 Jelly Bean operating system with a 5-megapixel camera and a 6-month movie subscription for $140 (8,500 rupees)!
How is YOUR crystal ball?
Are you monitoring and re-evaluating your attainable markets and shares? Are you redefining your businesses? have you found creative ways of extending product life cycles? Are you noting major shifts in supply chains and aligning your companies with the king (or prince) makers of the next few years? Are you redefining your markets and stepping "outside" the traditional boxes? If not, I suggest re-reading "Blue Ocean Strategy" by W. Chan Kim and Renée Mauborgne (2005, Harvard Business School Publishing Corporation).
As a supporting organization of the China Sourcing Fair Fall 2014, Electronics & Components to be held on October 11-14, 2014 at AsiaWorld-Expo, at the Hong Kong Airport, the HKPCA is offering its members VIP Buyers'* privileges to this Fair. These include:
- Free admission to the Fair;
- Free transportation arrangements to the Fairs;
- Coupons for F&B & shopping discounts at the Hong Kong International Airport area and AsiaWorld-Expo;
Exclusive use of onsite office suites to its invited VIP buyers (Wifi connection, office equipment, etc);
- A free Octopus Cash Card with HK$150 stored-value for transportation or purchases.
Masamitsu "Matt" Aoki has updated his detailed charts of "Build-Up Types of Printed Wiring Boards and Their Applications in Japan" (Version 14.1) and "Thin Types of Printed Wiring Boards and Their Applications in Japan" (Version 24.1). They are both now current through June 2014.
Write to us at firstname.lastname@example.org if you wish a copy.
Link to new EMSNow video interview by Philip Stoten at IPC PCB EXPO 2014 (9 minutes): https://www.youtube.com/watch?v=IVOPMgbZ6kA